Apollo Tyres targets double-digit growth, aims to outperform peers; stock rises up to 6%

Shares of Apollo Tyres Ltd gained up to 6% on Friday, May 16, after the company, in its concall, guided that its next quarterly earnings will be better than those it reported this week. It said the company was targeting double-digit growth.

The Apollo Tyres management said the company has underperformed both peers as well as the industry in the fourth quarter. However, stability in commodity costs should aid profitability.

The management said the replacement market has been robust, while the original equipment manufacturer (OEM)  and exports underperformed.

The company guided that the first quarter numbers might outperform its peers as well. It added that the company would see growth in both OEM and exports in the June quarter.

The management said the fresh tariff impact has been marginal so far. The raw material trend in the first quarter is also flattish, so far. The company said it is unlikely to see a major fall in rubber prices due to a lean season.

Fourth quarter performance

Apollo Tyres reported a 48% decline in its consolidated net profit in the fourth quarter at ₹184.5 crore due to "underperformance" in terms of sales. In the previous year, it had reported a net profit of ₹354 crore.

Its revenue from operations increased 2.6% to ₹6,423.5 crore from ₹6,258 crore in the last year. Its earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by 18.5% to ₹837.2 crore from ₹1,027.8 crore in the year-ago period, which resulted in its EBITDA margin contracting to 13% from 16.4% in the previous year.

Shares of Apollo Tyres Ltd gained 6.1% to hit an intraday high of ₹509.8 apiece. The stock was up 4.52% at ₹502.15 apiece at 11.05 am. It has gained 12% in the past month.

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